IDBI Bank Q2 results: Net profit falls 39% on high base from exceptional gain; NII jumps, asset quality improves

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IDBI Bank on Saturday reported a 39.2 percent year-on-year decline in net profit to Rs 2,206 crore for the second quarter of FY27, compared with Rs 3,627 crore in the corresponding period last year. However, the lender's net interest income (NII) jumped nearly 29 percent, while net interest margin (NIM) expanded significantly and asset quality improved.

The sharp decline in reported profit was largely attributable to a high base in the year-ago quarter, which included a one-off gain of Rs 1,699 crore from the sale of a strategic investment in NSDL. Excluding this gain, IDBI Bank said its net profit increased 14 percent year-on-year.

Sequentially, net profit rose around 4 percent from Rs 2,115 crore in the April-June quarter.

Net interest income, the difference between interest earned and interest paid, increased 28.7 percent year-on-year to Rs 4,227 crore from Rs 3,285 crore a year earlier. On a sequential basis, NII grew approximately 21 percent from Rs 3,486 crore.

The bank's net interest margin improved to 4.11 percent from 3.71 percent in the year-ago quarter, an expansion of 40 basis points. NIM also increased 50 basis points sequentially from 3.61 percent in the June quarter.

Operating profit stood at Rs 2,893 crore, rising 33 percent sequentially. Excluding the one-off NSDL gain recorded last year, operating profit grew 59 percent year-on-year.

The bank's cost-to-income ratio declined to 48.17 percent, an improvement of 385 basis points sequentially, while its cost of deposits fell to 4.55 percent from 4.69 percent a year earlier.

IDBI Bank Q2 results: Asset quality improves

IDBI Bank's gross non-performing asset (GNPA) ratio declined to 2.12 percent from 2.30 percent in the preceding quarter and 2.65 percent a year earlier. However, the net NPA ratio edged up marginally to 0.17 percent from 0.16 percent in the June quarter, although it improved from 0.21 percent a year earlier.

The bank's provision coverage ratio, including technical write-offs, stood at 99.24 percent at the end of September.

Deposits rise 17%, advances grow 18%

Total deposits increased 17 percent year-on-year to Rs 3,55,684 crore from Rs 3,03,408 crore, while net advances grew 18 percent to Rs 2,71,533 crore from Rs 2,30,220 crore. On a sequential basis, deposits increased 9 percent, while net advances expanded 5 percent.

Current account and savings account (CASA) deposits rose 12 percent year-on-year to Rs 1,55,877 crore. The CASA ratio stood at 43.82 percent, improving 18 basis points sequentially.

Capital adequacy strengthens

IDBI Bank's capital adequacy ratio (CRAR) improved to 27.10 percent from 25.39 percent a year earlier, while its Tier 1 capital ratio increased to 26.55 percent from 23.79 percent. The bank reported a return on assets (ROA) of 1.83 percent for the September quarter.

IDBI Bank-Fairfax deal

The results follow the Cabinet's approval of a 60.72 percent stake sale to Fairfax Financial Holdings for Rs 52,878 crore, at Rs 81 per share. IDBI Bank shares closed at Rs 84.12 on Friday, after plunging 7.7 percent on Thursday following the announcement. The stock is down 19 percent year-to-date, compared with an 11.5 percent decline in the Nifty 50.